The Ugly Side of Transparency in HR (And Everything Else)

By Chris Arringdale

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Transparency rules in today’s workplace. Recruiting, interviewing, hiring, performance management, every process of talent management is being uprooted because of this stubborn need for workplace transparency. Perhaps the need is warranted. Trust is a key factor in acquiring and retaining top talent and trust, in one way or another, is built from transparency, but is there such a thing as too much transparency? And, if there is (hint: there is), how do we find the happy-medium for workplace transparency?

Here’s the thing about transparency…

After witnessing the poor choices of fraudulent companies in the 1990s, people want to know more about what they buy, who they buy from and who they work for. According to the 2015 Global CSR Study, “global consumers state they have a more positive image (93%), are more likely to trust (90%) and are more loyal to (88%) companies that support social and environmental issues.” Whether it’s consumers or employees doing the digging, people today demand to know what companies today are up to behind closed doors.

The growth of social media has been an integral aspect of transparency today, giving everyone a plethora of outlets to share their experiences, good or bad. This leaves little choice for employers who have seen the affect sites like Glassdoor, Twitter and Facebook have on attracting and retaining talent.

Of course, there are benefits to workplace transparency...

This new emphasis on transparency has changed the workplace for a number of reasons, all of which will vary from company to company. But, here are some notable benefits of workplace transparency:

Accountability: Transparent cultures force employees to have an increased sense of accountability, which fuels engagement. For example, according to Gallup research, employees with managers who know what projects and tasks they are responsible for are seven times more likely to be engaged in their work.

Efficiency: Transparent cultures make it harder for underperformers to get away with subpar work, giving employers the upper hand when it comes to breeding a high performing workforce.

Reputation: Transparent cultures are something 96% of job seekers believe is important in their own career path. This means transparency isn’t just a way to affect engagement, but a critical part of talent attraction and retention strategy.

Transparency is not all rainbows and butterflies, however. Unfortunately, the existence of a transparent workplace can be just as harmful as the lack of it.

There are also risks associated with workplace transparency…

Far less discussed are the negative effects associated with workplace transparency. Perhaps it’s because employers believe the benefits outweigh the risks, but it’s better to go at any strategy understanding the ins and outs and possible scenarios.

The psychology case for transparency: Researchers from the University of Nottingham, VU University Amsterdam and Erasmus University Rotterdam conducted an experiment to test how transparency impacts decision making.

In a “Deal or No Deal” simulation, one group of contestants played the game on a lab computer and the other group in a game-show simulation complete with a host, audience and cameras. What they found was a more transparent atmosphere actually increased contestants’ fear of losing, causing them to play it safe when it came to a risky gamble. “In essence, what this means is that our subjects found the limelight constraining and anonymity liberating.”

What this tells us is without the right balance of workplace transparency, employers are risking an overly cautious workforce, which in professional service industries such as finance and marketing can be detrimental to future business.

Transparency as a distraction: Excessive transparency acts a distraction in a number of ways. Employers who share too much information about the business run the risk of creating unwanted stress for employees who may constantly be thinking about how their job impacts the bigger picture. While this mindset is the cornerstone of a valuable employee, it can be disrupted by transparency. Moreover, sharing sensitive information, like the financial struggles of the business, has instability written all over it and could chase good employees out the door for fear of their livelihood.

Transparency caters to specific personality types: As mentioned, imbalanced transparency is an ingredient for turnover. It begs the question, Is transparency for everyone? And the answer is no. In fact, according to Ryan Mead, CEO of Vitru, a personality and work values assessment platform used by HR professionals, employees who rank high for Stability and Structure thrive on predictability, consistency and security and are quick to be lose motivation if transparency disrupts that.

The greatest takeaway from these workplace transparency facts is there has to be some level of restraint when it comes to sharing pertinent information with employees. While leaving employees in the dark is recipe for disloyal, disengaged employees, the same can be said for workplace transparency. Each company’s level of transparency is going to vary depending on the work culture and personalities making up their workforce, but employers should proceed with caution.

Bio: Chris Arringdale

Chris Arringdale is the Co-Founder and President of Reviewsnap, an online performance appraisal software that allows you to customize performance management, competencies, rating scales and review periods. Reviewsnap serves more than 1,200 customers worldwide including, Penske Racing, CubeSmart, PrimeSource and Nonprofit HR Solutions.

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